US Fed signals more rate rises to come as Powell says: ‘The job is not done’
The US economy still faces more punishing rate rises even as inflation slows rapidly, the head of the Federal Reserve has warned.
Chairman Jerome Powell said the bank had “more work to do” to bring inflation back to its 2pc target despite signs that price rises are slowing.
The Fed this evening lifted the target US interest rate by 0.25 percentage points to 4.5 to 4.75pc, returning to smaller adjustments for the first time since the beginning of the most aggressive round of hikes since the 1980s.
The downshift in momentum prompted US stock markets to rally, with the S&P 500 up by as much as 1pc.
However, Mr Powell signalled at least two more rate increases were likely this year and any cuts were unlikely until at least 2024.
Mr Powell told reporters that “a couple more rate hikes” were “probably necessary” despite signs that “the disinflationary process has started”, meaning price rises were slowing.
“We have more work to do,” he said: “While recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
Mr Powell’s comments will raise pressure on the Bank of England and the European Central Bank to keep increasing rates to curb inflation, despite growing concern about the damaging effects on their economies.
The Bank of England is expected to raise rates by another 0.5 percentage points tomorrow, but may slow the pace of increases after that.
The European Central Bank, which was slower to raise rates, will likely also opt for a half-point increase when its governing council meets on Thursday. ECB head Christine Lagarde has repeatedly said that the central bank still has further to go.
The Fed's commitment to continued rate rises came as new data showed the US jobs market remains hot, with more vacancies than people.
Figures showed there were 1.9 vacancies for every unemployed person in December. More than 11 million jobs were advertised, higher than the 9.5 million openings economists had forecast.
“The job is not done," Mr Powell said. “We have to complete the job. That is why we are here.”
Inflation in the US has fallen to 6.5pc from a high of 9.1pc. Official estimates released on Wednesday showed inflation in the Eurozone dropped to 8.5pc in January, down from 9.2pc a month earlier.
BoE Governor Andrew Bailey said a fortnight ago there was “the beginning of a sign that a corner has been turned” for the UK on inflation as energy prices fall around the world.
Mr Powell said: “The global picture is improving a bit.”
08:23 PM
Wrapping up
Thanks for joining us today. That's all from us for now, but do tune in again tomorrow. In case you missed them, here's some of our top stories from today:
Lingering EU red tape forces farmers to remove free-range egg labels
NatWest chief Alison Rose under pressure over bank’s poor savings rates
BP to cut back on green shift amid booming demand for fossil fuels
07:54 PM
'The job is not fully done,' Powell says
Mr Powell has suggested that it would be worse to not go far enough to tackle inflation and to have it spring back later on.
"I do think in this situation where we still have the highest inflation in 40 years, the job is not fully done."
07:45 PM
Jerome Powell: 'Without price stability, the economy does not work for anyone'
Fed chair Jerome Powell is speaking in the wake of the US central bank decision to raise interest rates, saying there are large sectors where inflation has not started to ease.
"The issue is that we have a large sector called non-housing services, core non-housing services where you don't see disinflation yet... So far what we see is progress, but without weakening in labour market conditions."
He warned, however, over the pressures that can come from not dealing with inflation, saying: “Without price stability, the economy does not work for anyone."
07:20 PM
Electronic car maker Rivian to cut staff amid Tesla price war
Meanwhile, away from the US central bank, US electric vehicle manufacturer Rivian Automotive has announced it is slashing its workforce by 6pc as part of cost-saving measures amid an industry price war ignited by Tesla.
The California-headquartered company will lay off around 840 members of its 14,000-strong workforce. The decision will not impact Rivian’s manufacturing operations at its Illinois plant.
In an email sent to employees today, R.J. Scaringe, chief executive of Rivian, apologised for the cuts and said: “We must focus our resources on ramp and our path to profitability”.
Rivian is among manufacturers now under pressure following Tesla's announcement last month that it will globally reduce prices of its electric vehicle range by as much as 20pc, sparking a price war among its rivals. Earlier this week, Arrival, a UK electric vehicle start-up, revealed plans to halve its workforce.
It’s the second time the Rivian has made job cuts in less than a year. Last July, Rivian began reducing its headcount by 6pc as part of a broader restructuring plan.
The move comes as Rivian looks to increase production of its R1 line of electric trucks and electronic delivery vans for Amazon, as well as launching its delayed R2 line of smaller SUV and pick up trucks.
Rivian’s share price has fallen nearly 90pc since debuting on the NASDAQ in November 2021.
07:16 PM
Interest rate rises may continue into summer, analysts say
Neil Shah, head of research at Edison Group, says the Fed's stance on inflation suggests it could carry on raising rates into the summer.
"More important than today's decision to raise interest rates by 0.25pc, has been the clues left by Jerome Powell about the Federal Reserve’s direction for 2023.
"While the markets have up until now been expecting the Fed to solely conduct small hikes through February and March, Powell’s office has today signalled that at least a third hike may be needed. This decision would take rate increases all the way up to the May meeting and perhaps beyond into summer. A major concern for Powell is very likely to be wage inflation running too hot."
07:11 PM
Fed raises interest rates and says more to come
The Federal Reserve has raised interest rates again, as expected, and said more increases were set to come.
The US central bank is pushing through a quarter percentage increase in interest rates, to a range of between 4.5 and 4.75, as it said "recent indicators point to modest growth in spending and production".
"Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation has eased somewhat but remains elevated.
"Russia's war against Ukraine is causing tremendous human and economic hardship and is contributing to elevated global uncertainty. The Committee is highly attentive to inflation risks."
The Federal Reserve said ongoing increases would be "appropriate" to help return inflation to 2pc over time.
06:43 PM
Deadline for Britishvolt bids passes
The deadline to bid for the assets of collapsed battery maker Britshvolt has passed, with uncertainty about whether a turnaround can be mounted.
Howard Mustoe, Oliver Gill and Matthew Field have the story:
Just one firm bidder had emerged by the deadline of 5pm on Wednesday, with uncertainty around other names linked to a potential approach.
Hopes of convincing turnaround specialist Greybull, the former owner of British Steel and Monarch Airlines, were hanging by a thread. Following last ditch talks on Tuesday evening, City sources said the turnaround fund's interest was waning.
Former Britishvolt investor Glencore is understood to be uninterested despite early reports to the contrary. It was unclear whether Jaguar Land Rover owner Tata would make an offer, following earlier suggestions it was keen to make a bid.
The only contender to have confirmed an offer is Australian Recharge Industries, which is owned by New York-based investment company Scale Facilitation. Recharge Industries made a £30m bid.
One person who has seen Recharge’s plans to rescue the business described them as "very ambitious".
Administrator EY declined to comment.
06:14 PM
Virgin Money sets aside £66m to cover bad loans
Virgin Money has set aside £66m to cover bad loans as the economic outlook darkens and squeezes British households.
As Simon Foy reports:
The UK’s sixth-largest lender said it has bolstered its call centre teams and temporarily paused some restructuring efforts amid a surge in customer inquiries owing to soaring interest rates and cost pressures.
The bank, which was created in 2018 following a merger with FTSE 250 rival CYBG, launched a three-year restructuring programme in 2021 to further cut its branch network, but said it has largely paused this since the start of last year in response to the cost of living crisis.
David Duffy, chief executive of Virgin Money, said: “Arrears remain broadly stable but we’ve increased the support available to those who need it and remain prudently provisioned for an uncertain economic outlook.”
05:48 PM
Airbus and Qatar Airways strike settlement in billion-dollar row
An “amicable and mutually agreeable settlement” has been reached between Airbus and Qatar Airways, ending a bitter legal battle over flaking paint and the grounding of A350 aircraft.
The billion-dollar dispute saw Qatar Airways, the Gulf state-owned carrier, ground its entire fleet of A350s after discovering cracked and peeling paint, which it claimed posed a safety issue if the aircraft was hit by lightning.
This led Airbus to revoke dozens of jet orders from the Gulf airline. The European plane maker said that problems were merely maintenance issues that do not compromise the integrity of the aircraft.
Airbus and Qatar Airways announced today they have agreed to discontinue their legal claims in a confidential settlement, which was not admission of liability of either party.
According to the statement, a repair project is now underway which will see the grounded A350 fleet return to the air. The agreement is said to enable Qatar Airways and Airbus to “move forward and work together as partners”.
The High Court trial had been expected to have huge ramifications on the aviation industry by calling into question the safety of one of the world's most popular long-haul aircraft.
05:21 PM
HSBC rolls out more casual uniforms for bank workers
HSBC workers will be offered more "menopause-friendly" clothes and chinos, as part of a roll-out of more casual uniforms across the bank.
HSBC said it had redesigned its uniforms to reflect the "more casual new look of the banks' branches", as the days of "bowler-hatted bankers and intimidating bank branches with rows of screens" were long gone.
Its new range also includes jumpsuits and clothes such as hijabs.
It follows a move by British Airways earlier this year to roll out its new uniforms, designed by celebrated Savile Row tailor Ozwald Boateng. The redesigned outfits by the airline met with some criticism, with its jumpsuits in particular prompting a backlash over being impractical for cabin crew.
04:47 PM
BT rival Cityfibre blames 'struggling' economy as it cuts 400 jobs
BT rival Cityfibre is to cut up to 400 jobs amid rising costs and growing competition between the UK’s high-speed broadband providers.
As James Warrington and Matthew Field write:
The telecoms firm, which is backed by Goldman Sachs, is reducing its 2,000-strong workforce by up to a fifth in a bid to cut costs.
The move comes as challenger broadband providers fight for survival in the race to roll out full-fibre internet connections across the country.
In a note to staff, seen by the Telegraph, chief executive Greg Mesch said: “The UK’s economy is struggling, and this is affecting both the market and our customers.
“While our rollout is fully financed, these pressures only increase the importance of taking responsible financial and operational decisions.
“Realising a more efficient operating model requires us to act and structure ourselves differently. Sadly, this is likely to result in a reduction to our workforce.”
04:18 PM
GSK says Britain’s pharma industry is at a ‘tipping point’
Britain’s life sciences industry is at a "tipping point" following major successes during the pandemic, one the country's biggest pharma companies has warned.
Dame Emma Walmsley, chief executive of GSK, said there was a big opportunity for the UK's life sciences sector, but that the country must "make the right decisions now".
It comes amid growing tensions between the industry and ministers over a levy designed to protect the NHS from rising prices, which has ballooned in recent years.
Last weekend, it emerged that both GSK and fellow British pharma giant AstraZeneca had written to the Prime Minister to argue that the levy was "undermining" growth. AstraZeneca played a key role during the pandemic, helping to manufacture one of the most widely-used Covid vaccines and cementing the UK as one of the leading hubs for pharma development.
According to The Times, Dame Emma and AstraZeneca chief executive Pascal Soriot had told Rishi Sunak that an "urgent resolution" was needed to "prevent an acceleration in pharmaceutical disinvestment from the UK”.
03:59 PM
Handing over
That's all from me today. As we await the US Federal Reserve's interest rate decision at 7pm this evening, I'll leave you in the hands of Hannah Boland and Adam Mawardi.
03:52 PM
BP to cut back on renewable efforts after disappointment with green push
The chief executive of BP plans to "dial back" a push into renewable energy after disappointment with the financial returns it has so far generated, according to reports.
Matt Oliver has the latest on this one:
Bernard Looney is said to have told colleagues he is disappointed with the outcomes so far from the company’s push into areas such as wind and plans to narrow its focus.
He is also said to believe that BP needs to do more to convince shareholders that it is focused on maximising profits and will place less emphasis on so-called ESG (ethical, social and governance) commitments, the Wall Street Journal reported.
Even a partial reversal on BP’s push into renewable energy would mark a significant change in tone from Mr Looney.
03:32 PM
Octopus Energy losses double as prices surge
Octopus Energy's losses more than doubled to £166m as a surge in electricity and gas prices outpaced increases to the cap on household bills.
Special correspondent Matt Oliver has the details:
The company said losses grew from £75m to £165.7m in the year to April 30, even as sales jumped from £2bn to £4.2bn, accounts published on Wednesday show.
It came as the company also grew its customer base from 2.1m to 3.4m. Some 3.2m are UK customers.
Octopus finance chief Stewart Jackson said the vast majority of the loss was due to voluntary actions the company took to ease pressure on household bills, including by not charging the full amount the company could under the government price cap.
The company also took on 600,000 customers from failed supplier Avro Energy.
03:19 PM
Airlines cancel over 1,800 US flights as ice storm hits
Airlines have cancelled more than 1,800 flights in the United States today, after an ice storm hit states from Texas to West Virginia.
A total of 1,897 flights within, into or out of the United States were cancelled, while 750 flights were delayed according to flight-tracking website FlightAware.
"This week's winter storm is having an impact on our operations, accounting for a significant number of cancelations," American Airlines said in a statement.
The Federal Aviation Administration (FAA) on Tuesday warned in a tweet that travellers could expect to see some snowy conditions in certain areas including Dallas, Fort Worth and Memphis, which could delay certain flights.
02:45 PM
City of London traders hit by Russia-linked cyber attack
Trading in the City of London has been plunged into chaos after a Russian-linked ransomware gang attacked a company that plays a key role in Britain's financial system.
Banking & financial services correspondent Simon Foy has the details:
Lockbit, the group behind the cyber attack against Royal Mail last month, targeted trading software provider Ion Group on Tuesday.
The London-based company plays an integral role in the plumbing that underpins the trading of shares, debt and derivatives in the Square Mile and around the world.
Ion said 42 clients have been affected by the attack as it faces disruption in its cleared derivatives division.
02:34 PM
US markets drop ahead of rates decision
US markets slumped at the opening bell as investors cautiously awaited the Federal Reserve's decision on interest rates later in the day.
The Dow Jones Industrial Average fell 0.7pc to 33,857.07, while the broad-based S&P 500 fell 0.3pc to 4,064.95.
The tech-heavy Nasdaq Composite dropped 0.2pc to 11,564.89.
02:16 PM
Pound gains ground against the dollar
The pound has gained 0.2pc against the dollar ahead of the Federal Reserve's interest rate decision being announced at 7pm UK time.
Sterling is trading above $1.23 as it emerged payrolls at US companies grew at the slowest pace in two years in January, rising by 106,000.
The figures from ADP Research Institute add weight to hopes the Fed will slow down its strengthening of the dollar with interest rate rises as the labour market cools down.
The Fed is widely seen as raising its target interest rate by a quarter of a percentage point in its first policy meeting of the year, after the rapid increases in 2022 to tame decades-high inflation.
01:59 PM
Oil production to remain at present levels, says Opec+
A committee of the Opec oil cartel and its allies recommended keeping crude production steady, delegates said, as the market awaits clarity on demand in China and supplies from Russia,
Saudi Arabia and its partners will continue to hold output at levels set late last year, when they announced a hefty cutback of two million barrels a day to balance markets amid a fragile economy.
Oil prices have had a rocky start to 2023, with a rally in mid-January fading away by the end of the month.
That has prompted the Organization of Petroleum Exporting Countries and its allies, including Russia, to remain cautious even as industry voices from Goldman Sachs to Trafigura predict price gains later this year.
Brent crude futures were little changed near $86 a barrel following the news.
01:36 PM
US markets expected to waiver before rates decision
Wall Street is poised to lose ground at the opening bell as investors cautiously await the Federal Reserve's decision on interest rates later in the day and a reading on private job additions last month.
The Fed is widely expected to raise its target interest rate by a quarter of a percentage point in its first policy meeting of the year, after the rapid increases in 2022 to tame decades-high inflation.
Investors will also likely comb through chairman Jerome Powell's news conference for clues on the trajectory of future rate increase.
Dow Jones Industrial Average futures contracts were down 0.4pc while the S&P 500 is on course to drop 0.2pc. The Nasdaq 100 is set to rise 0.1pc.
01:17 PM
Shell not spending what it claims on renewables, say activists
Shell has been accused of misleading investors over its renewable energy spending plans in a complaint filed with the US securities regulator by activist group Global Witness.
Like other leading European energy companies, Shell is aiming for rapid expansion of its low-carbon and renewables business as part of efforts to reduce greenhouse gas emissions over the coming decades.
In today's complaint to the Securities and Exchange Commission (SEC), Global Witness said it was "concerned that Shell has materially misstated its financial commitment to renewable sources of energy by inflating" its spending in that area.
The British company said in February 2021 that it aims to spend between $2bn (£1.6bn) and $3bn (£2.4bn) a year on renewables and energy solutions.
Shell's spending on the division, which includes renewables, carbon capture and offsets as well as hydrogen and retail gas and power sales, amounted to $2.4bn (£2bn) in 2021, its annual report said. That equated to 12pc of the company's total spending.
Global Witness said that its own calculations showed Shell spent only 1.5pc, or $288m (£233m), of its total spending of $20bn (£16.2bn) on renewable energy sources such as wind and solar. Shell rejected the accusations.
12:57 PM
Hollywood's Chernin in talks to buy ITV Studios
Veteran Hollywood producer Peter Chernin and the owner of French TV production group Banijay have expressed an interest in buying a stake in ITV's Studios, the maker of hit show "Love Island", according to Reuters.
Shares in ITV rose more than 3pc in early trading to a 10-month high after the news. The business has been valued at as much as £3bn.
ITV is open to selling a minority stake in the Studios to a strategic partner, such as a larger TV producer or private equity firm with production assets, sources said, but it wants to retain majority control.
Both Mr Chernin's co-production vehicle North Road and Banijay-parent FL Entertainment are understood to prefer to control the business, which has been a stumbling block in a potential deal.
Mr Chernin, known for the revival of "Planet of the Apes" and "Hidden Figures", set up North Road last summer after he raised $800m from private equity firms Providence and Apollo to fund acquisitions in the United States and abroad.
ITV and FL Entertainment declined to comment. North Road did not respond to requests for comment.
12:40 PM
Rail pay offer of up to 14.4pc for those on lowest salaries
Under the pay deal being offered to the RMT, rail workers will receive a minimum basic pay rise of £1,750 or a 5pc increase, whichever is greater, up to a maximum of £3,500, with back pay from January last year.
Staff will then receive a 4pc increase to the annual base rates, effective January 1 this year.
Over the two years, this adds up to an increase of between 9.2pc to 14.4pc, with more going to those on the lowest salaries.
The Network Rail offer to the RMT will also include:
Improved carer's leave. Registered carers will be able to transfer five days paid volunteering leave to five days paid carer's leave.
A better long service pay award framework, which will be backdated to 2022.
12:33 PM
Network Rail 'can't afford' to increase basic pay offer to unions
The revised pay offer for the RMT does not include a change in the amount of money being offered under a pay deal for all staff.
It includes moving staff on 40-hour week contracts to 35 hours over time, and an increase in the London allowances for staff to £3,300 for inner London, £1,950 for outer London and £975 for the South East.
In a letter sent to the RMT, Network Rail's chief negotiator Tim Shoveller said: "We can't afford to increase December's basic pay award, but we have added some fresh proposals."
12:19 PM
Britain's biggest pub group plans to sell 1,000 venues
Stonegate Pub Company plans to sell 1,000 pubs less than four years after spending £1.3bn buying rival Ei Group to become Britain's biggest pub group.
The Slug and Lettuce chain owner, which is owned by private equity firm TDR Capital, plans to offload more than a fifth of its pubs for an estimated £800m, according to Bloomberg.
The pub giant has struggled to make up ground lost during the pandemic and is grappling with a £2.6bn debt pile.
Stonegate's chairman Ian Payne said: "The biggest concern is energy. We know what we're going to pay in February and March, but we still don’t know what we’re going to pay beyond that."
A Stonegate representative declined to comment on the potential sale.
12:10 PM
British Steel 'considering 800 job losses'
British Steel is preparing to cut 800 jobs even as it conducts talks with ministers to secure £300m of taxpayer funding, it has been reported.
Britain's second-biggest steel producer has been discussing launching a consultation on 800 redundancies, which would be focused on its Scunthorpe plant in north Lincolnshire, according to Sky News.
An industry insider said there was a possibility that trade union officials could be briefed on the proposals as early as today.
11:55 AM
Sainsbury's takeover speculation deepens as Bestway extends stake
The billionaire cash and carry tycoons behind Bestway bought 20 million more Sainsbury's shares shortly after announcing a major stake last Friday, according to a stock market filing on Tuesday.
Bestway has taken its shareholding in Britain's second-biggest supermarket from 3.5pc to 4.5pc.
The disclosure follows revelations by the Telegraph last week that a top executive at Bestway first discussed a takeover swoop for Sainsbury's some 10 months ago.
Bestway, founded by Pakistani-born Sir Anwar Pervez in 1976 and still in family hands, insisted on Friday that it had no plans to make an offer.
The Bestway Group has grown through a series of acquisitions since its launch nearly half a century ago.
One of those was convenience store chain Costcutter, which was founded by prominent Yorkshire businessman Colin Graves, the former chairman of the England and Wales Cricket Board.
Mr Graves told the Telegraph that he came up with the suggestion to buy Sainsbury's during a discussion with Bestway Wholesale managing director Dawood Pervez last year.
11:36 AM
Rail union receives new pay offer
Rail union the RMT, whose members are among those on strike today and on Friday, has received a new pay offer from Network Rail.
🚨 @RMTunion response to @networkrail revised offer 🧵
An RMT spokesperson said: "We have received a revised offer from Network Rail and our NEC will consider its contents...— RMT (@RMTunion) February 1, 2023
11:35 AM
Pakistan's inflation rises to 48-year high
As the Bank of England ponders its next interest rate move in a bid to bring down rampantly rising prices, policymakers will be glad they are not facing the task in front of Pakistan.
Inflation has risen to a 48-year high in the crisis-hit country, where the International Monetary Fund is visiting for urgent talks.
Inflation in January was recorded at 27.55pc, the highest since May 1975, with thousands of containers of imports held up at Karachi port, according to data released by Pakistan's statistics bureau.
Its economy is in dire straits, stricken by a balance of payments crisis while it attempts to service high amounts of external debt.
The world's fifth-biggest population has less than $3.7bn (£3bn) in the state bank - enough to cover just three weeks of imports.
On Tuesday, an IMF delegation arrived in Islamabad to revive negotiations over a stalled bailout package with the government, which has so far held out from meeting the global lender's tough conditions.
11:22 AM
Big Telecoms advertising venture set to win regulator's approval
Deutsche Telekom, Orange, Telefonica and Vodafone's plan to set up an advertising joint venture to compete with Big Tech is set to win unconditional approval from EU competition authorities, according to Reuters.
The joint venture marks the telecoms sector's first attempt to take on Meta and Alphabet's Google in the lucrative online advertising sector and diversify their revenue streams.
10:59 AM
Free-range eggs may soon disappear as bird flu continues
Chickens and hens across Britain may have to stay indoors until the spring as the nation's worst-ever bird flu outbreak continues.
While risk levels are reviewed weekly, the UK's chief veterinary officer Christine Middlemiss said today that housing orders in place since November in England may not lift until spring, when wild birds that carry the virus migrate elsewhere.
That means free-range eggs — which typically account for more than half of supply — could soon be off the shelves.
The UK allows producers to keep the label for 16 weeks after housing orders are in place.
That runs out near the end of February. Flu case counts have dropped from October, but the chance of infection remains "very high," Ms Middlemiss said.
She said: "We’re seeing less outbreaks, which is great, but the risk is still there. There’s a balance between bird welfare and the bird-flu risk level, and we have to look at what that balance is."
10:40 AM
Eurozone inflation eases for third month to 8.5pc
Europe's inflation rate dipped at the start of the year, giving some relief to consumers but still leaving them facing higher prices.
The consumer price index for the 20 countries that use the euro currency fell to 8.5pc in January from a year earlier, European Union statistics agency Eurostat said today. That is after annual inflation hit 9.2pc in December.
It's the first report on consumer prices that includes data from Croatia, which joined the eurozone on Jan. 1.
Inflation in Europe has now slowed for the third month in a row, falling from a record high of 10.6pc in October.
Food and energy prices, which have been major factors driving up European inflation, kept fuelling the higher cost of living.
Natural gas prices have fallen from all-time highs last summer thanks to a scramble to find supplies outside Russia and mild winter weather that took the pressure off energy demand for heating.
Eurozone #inflation slowed to 8.5% YoY in January more than expected, suggesting a more heated debate to come at ECB meeting over how much more interest rates must still rise as Core CPI - a gauge of underlying inflation that excludes volatile items - held at ATH of 5.2%. (BBG) pic.twitter.com/5xxSGC7kxV
— Holger Zschaepitz (@Schuldensuehner) February 1, 2023
🇪🇺 Euro area core inflation surprised modestly to the upside in January (5.247% YoY), driven by another rise in core goods inflation (6.9%) while services eased somewhat (4.2%).
With the data quality caveat (🇩🇪), this is encouraging news at the margin. Goods inflation will ease. pic.twitter.com/dIIHU14emL— Frederik Ducrozet (@fwred) February 1, 2023
10:29 AM
Record sum spent in Premier League January transfer window
Premier League clubs spent a record £815m in a frantic January transfer window - nearly double the previous highest figure, according to sports finance experts Deloitte.
Deals came thick and fast in the final hours of the window on Tuesday, with big-spending Chelsea setting a new British record in signing Argentina's World Cup winner Enzo Fernandez from Benfica for £106.8m.
The gross spend was 90pc higher than the previous record £430m in 2018 and almost triple the previous January window.
10:16 AM
Manufacturing recovers slightly but remains in downturn
The UK's manufacturing sector recovered somewhat from its worst performance in over two years last month, according to an influential survey.
The S&P Global/CIPS UK Manufacturing PMI scored 47 in January, up from 45.3 in December.
December's score had been a 31-month low for the sector. Anything below 50 on the index means that the sector is contracting.
The downturn in eurozone manufacturing activity eased again last month as price pressures slackened and the fall in demand moderated, driving a surge in optimism.
The region's PMI climbed to a five-month high of 48.8 in January from December's 47.8, in line with a preliminary reading but still below the 50 mark separating growth from contraction.
🇬🇧The downturn across the #UK manufacturing sector softened in January (#PMI headline at 47.0; Dec: 45.3) but reductions in output and demand were sustained. Read more: https://t.co/4OvYrVUK3U @cipsnews pic.twitter.com/3K8h9sq742
— S&P Global PMI™ (@SPGlobalPMI) February 1, 2023
10:08 AM
Paypal boss calls for ‘compassion’ – as he sacks 2,000 staff
The chief executive of PayPal has called for "compassion for each other" as the tech company joined its peers in sacking thousands of staff.
Senior technology reporter Matthew Field has the details:
The digital payments company said it would cut around 7pc of its headcount, meaning 2,000 people will lose their jobs.
Dan Schulman, chief executive of Paypal, said: "Change can be difficult – particularly when it includes valued colleagues and friends departing."
PayPal joins a slew of other technology companies slashing jobs so far this year. Amazon has cut 18,000 jobs, with Google saying that it would trim 12,000 staff. Microsoft has said it will lay off 10,000 workers.
Read how morale at tech companies has been plummeting after mass layoffs.
09:22 AM
Oil ticks higher ahead of Fed and Opec+ meetings
Oil has edged higher before the Federal Reserve monetary policy decision and guidance from producer cartel Opec and its allies.
Brent crude, the international benchmark, has risen by 0.4pc towards $86, while US-produced West Texas Intermediate rose 0.6pc above $79 a barrel after gaining more than 1pc on Tuesday.
While the US central bank is expected to deliver another interest-rate hike at today's meeting, it is likely to be just half the size of the 50-basis-point move agreed in December as inflation shows signs of cooling.
Traders will also track any guidance from the Organization of Petroleum Exporting Countries (Opec) and its allies including Moscow.
Delegates predict that output will be held steady at a monitoring meeting today ahead of a fresh round of curbs on Russian energy flow that will kick in within days.
08:53 AM
Gas prices slip as storage levels hold up
European natural gas prices have fluctuated as traders weighed colder weather approaching next week against ample supplies.
Benchmark futures advanced as much as 6pc this morning before erasing gains.
Temperatures will drop below normal from Rome to Berlin and Stockholm next week, according to forecaster Maxar, though are generally expected to be milder than usual for the rest of the month.
The short-term cold spell signals the possibility of heavier withdrawals from the continent's gas storage sites, though inventories are still almost 73pc full and well above average levels of the last five years.
Dutch front-month futures, Europe's gas benchmark, were down 0.6pc at €57 a megawatt-hour.
08:31 AM
Markets rise after strong corporate results
Stock markets inched higher after a slate of positive corporate updates, although the mood was tempered by concerns about a slowing British economy and upcoming monetary policy decisions.
The blue-chip FTSE 100 gained 0.2pc to 7,786.21, while the midcap FTSE 250 index climbed 0.5pc to 19,942.74.
Entain climbed 2.7pc after the gambling firm raised its annual profit forecast.
ITV rose 3pc after Reuters reported veteran Hollywood producer Peter Chernin and French TV production group Banijay's parent had expressed interest in the British broadcaster.
Darktrace shares added 1.9pc after the cybersecurity firm announced share buybacks, a day after a short-seller report knocked its shares by as much as 10pc.
Housing stocks fell 0.4pc as data showed British house prices dropped by a bigger-than-expected 0.6pc in January and are now 3.2pc below their peak in August, following a surge in borrowing costs.
08:11 AM
Ladbrokes owner Entain reports 'record' active customers after World Cup
Entain, the gambling giant behind Ladbrokes and Coral, has raised it earnings guidance after a strong final quarter of 2022.
The sports betting and gaming group said net gaming revenues increased by 11pc in the quarter to December 31, compared with a year earlier, as it witnessed a "record" number of active customers.
The group said this was buoyed by a "successful men's World Cup", although this was slightly offset by disruption to sports fixtures from cold weather and heavy winds.
Entain said earnings for 2022 were "ahead of expectations" and are now due to be within a range of between £985 million and £995 million for the year.
08:04 AM
Markets mixed at the open
Markets were mixed at the open as data showed falling house prices and investors hold back as they await interest rate decisions from the US Federal Reserve, Bank of England and the European Central Bank.
The FTSE 100 was up 0.3pc to 7,793.28 while the FTSE 250 was flat at 19,857.66.
08:01 AM
Snap reports first ever flat set of revenues
Snap shares fell 16pc in extended trading in the US as it reported its first ever flat quarter of revenues.
It comes despite Snap persuading more than 2 million users to pay for special features on its Snapchat social-media app, known for its disappearing messages and face-changing filters.
The subscription service, known as Snapchat+, gives people exclusive access to options such as the ability to customize the notification sound for each friend on the app.
However, its fourth quarter revenues of $1.3bn (£1bn), which included the Christmas period, were enough to see its share tumble.
It also dragged down Facebook parent company Meta and Pinterest, as Snap shares are considered a bellwether for the digital advertising industry because it reports its results first.
07:51 AM
Shingles vaccine boosts GSK
GlaxoSmithKline (GSK) has revealed that sales lifted higher over the past year as it was buoyed by demand for its shingles vaccine Shingrix.
The London-listed pharmaceutical giant said sales grew by 19pc to £29.3bn in 2022, compared with the previous year.
GSK said its blockbuster shingles treatment brought in £3bn in sales after 72pc growth year on year.
Meanwhile, vaccines revenues increased by 17pc to £7.9bn for the year.
07:47 AM
Stations eerily quiet as commuters left stranded by strikes
The first day of rail strikes this week has left many commuters unable to work - or furiously typing at laptops at home in their jogging bottoms.
Fifteen operators will run zero trains throughout today and Friday in their dispute over pay and conditions. Three operators will run a reduced service.
Here is everything you need to know about the rail strikes this week.
07:36 AM
Vodafone revenues hit by declines in Germany, Italy and Spain
Vodafone has reported a further slowdown in revenues as the telecoms giant battles to turn around its business.
James Warrington has the latest:
The FTSE 100 company reported revenue of €11.64bn (£10.27bn) at the end of its third quarter, down marginally from €11.68bn in the same period last year.
Mobile service revenue fell 1.3pc to €9.5bn (£8.4bn).
The slowdown was driven by declines in Vodafone's business in Germany, Italy and Spain. This offset growth in the UK, which benefited from Black Friday and the release of the new iPhone.
Margherita Della Valle, acting chief executive of Vodafone, said: "Although we're continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better."
It comes at a challenging time for Vodafone, which ousted its chief executive Nick Read in a shock move last month.
The company is facing pressure to simplify its business and has set out plans to cut €1bn in costs, including hundreds of job cuts.
07:30 AM
January 'a tale of two halves' in property market
The 0.6pc decline in house prices in January was steeper than the 0.4pc decline economists had expected.
However, figures in the industry are reporting the first signs of a potential recovery.
Kylie-Ann Gatecliffe, director at Selby-based independent mortgage broker KAG Financial, said: "While December saw many buyers put the brakes on, in January they put their skates on.
"The downward pressure on prices once again reported by the Nationwide is stimulating demand. We have had an influx of enquiries from people looking to remortgage or move this year."
Nick Harris, co-founder at Wokingham-based Quarters Residential Estate Agents, said: "Though average property values fell in January and annual price growth continued to slow, overall activity levels were stronger than expected.
"January was a tale of two halves. The first half saw tumbleweed on the streets while the second half was particularly energetic."
07:20 AM
House prices suffer longest drop since 2008
House prices fell for the fifth month in a row in the longest string of declines since the global financial crisis more than a decade ago.
The average sale price fell to £258,297 in January, down from £262,068 in December, a fall of 0.6pc, according to Nationwide.
The fall means the average home is worth 3.2pc less than its August peak. Annual price growth slowed to 1.1pc in January.
It comes as the Bank of England is expected to raise interest rates by half a percentage point to 4pc on Thursday, heaping more pressure onto mortgage payers.
Mortgage approvals fell to their lowest level in two and a half years in December as higher borrowing costs took their toll on the property market.
Banks and building societies authorised 35,612 home loans during the month, the fewest since May 2020 when the housing market was shut due to the coronavirus pandemic, figures from the Bank of England show.
Nationwide's chief economist Robert Gardner said:
There are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover.
The fall in house purchase approvals in December reported by the Bank of England largely reflects the sharp decline in mortgage applications following the mini-Budget.
It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.
As we highlighted in our recent affordability report, the biggest change in terms of housing affordability for potential buyers over the last year has been the rise in the cost of servicing the typical mortgage as a result of the increase in mortgage rates.
Should recent reductions in mortgage rates continue, this should help improve the affordability position for potential buyers, albeit modestly, as will solid rates of income growth (wage growth is currently running at around 7pc in the private sector), especially if combined with weak or negative house price growth.
Nevertheless, the overall affordability situation looks set to remain challenging in the near term.
07:13 AM
Good morning
House prices dipped for a fifth straight month as the impact of rising mortgage rates takes hold.
Prices declined 0.6pc in January compared to the previous month, with annual growth slowing to just 1.1pc.
It comes as mortgage rate approvals declined in December to their lowest level since the start of the pandemic.
The average home in Britain is now worth £258,297, according to Nationwide.
5 things to start your day
1) Treasury rakes in extra £12bn as stealth taxes hit higher earners | More people stung by threshold freeze than expected as pay growth boosts tax take
2) Overseas investors plough record amount into government debt after mini-Budget exodus | Buyers snap up £38bn in gilts in boost to Sunak's government
3) Lotus to list electric car business in deal backed by world’s richest man | Bernard Arnault's exposure to the EV market puts him in competition with Elon Musk
4) ‘Dam bursts’ as insolvencies hit highest number since financial crisis | Interest rates and energy prices are crippling companies after end of Covid support
5) Mike Lynch-backed Darktrace accused of misrepresenting accounts by short seller | Cybersecurity company allegedly engages in ‘channel stuffing’ to inflate sales figures
What happened overnight
Asian stocks advanced after US shares ended January on a high note as signs of cooling inflation encouraged risk appetite ahead of the Federal Reserve's meeting this evening.
A benchmark of the region's shares advanced about 0.4pc, with key indexes rising in Hong Kong and Australia, while shares fluctuated in mainland China and Japan.
Tokyo stocks trimmed earlier gains and ended nearly flat Wednesday as investors waited for the US Fed to conclude its policy meeting.
The benchmark Nikkei 225 index edged up 0.1pc to 27,346.88, while the broader Topix index slipped 0.2pc to 1,972.23.
Adani Group stocks resumed their selloff after the share sale by the Indian conglomerate's flagship firm failed to turn sentiment from Hindenburg Research's fraud allegations.
In one bright spot for the group, nearly all dollar bonds issued by Adani companies extended gains into a second day.
The rupee was marginally stronger and the Nifty 50 stock index climbed as the government prepares to unveil its budget later Wednesday.
